Lobbying when the decisionmaker can acquire independent information

Politicians trade off the cost of acquiring and processing information against the benefit of being re-elected. Lobbyists may possess private information upon which politicians would like to rely without the effort of verification. If the politician does not try to verify, however, the lobbyist has no incentive to be truthful. This is modelled as a game in which the lobbyist lobbies to show his conviction that the electorate is on his side. In equilibrium, sometimes the politician investigates, and sometimes the information is false. The lobbyists and the electorate benefit from the possibility of lobbying when the politician would otherwise vote in ignorance, but not when he would otherwise acquire his own information. The politician benefits in either case. Lobbying is most socially useful when the politician's investigation costs are high, when he is more certain of the electorate's views, and when the issue is less important.     

Public protection against misperceived risks: Insights from positive political economy

Citizens often misperceive the nature of risks they face and the impacts of alternative actions on those risks. For example, consumers may underestimate the probability of flood in their area, or they may underestimate the beneficial effect of passive restraints on the likelihood of automobile accident fatality. But recommendations that the government should mandate optimal purchases are often ignored by politicians or rejected in favor of direct public compensation. This paper uses some simple models of public choice to explain why other remedies are used; it explicitly accounts for the fact that the same ignorant consumer whose behavior would have to be constrained are the ones whom the politician must please. In a simple world-of-equals model, such consumer-voters may well favor the alternative devices of implicit mutual insurance and conditional payment. When voters are heterogeneous, the political equilibrium (if one exists) is shown to depend upon the distribution of voters by perceived net benefit of public action and of taxes. Public action may be least feasible exactly when it would do the most good.     

What Not to Ask of Budget Processes: Lessons from George W. Bush's Years

Budget reform requires goals that are both good public policy and achievable. The core purpose of budgeting is to consider and relate details and totals. Common demands for reform are dubious because they slight consideration of details. For this reason, too strict a definition of "balance" would be bad policy; the demand for balance over many decades is neither good policy nor realistic; and multiyear discretionary spending caps can be both bad policy and impractical. Concern about passing annual budget resolutions ignores the fact that the major reason for annual totals is no longer endorsed by policy makers and economists. Scorekeeping should be honest and accurate and often can be improved, but possible achievements are limited. Budget reforms will not make government accountable if the governing coalition is united in seeking to avoid that, and if neither the public nor elites demand it.     

Politician preferences, law-abiding lobbyists and caps on political contributions

The effect of a contribution cap is analyzed in a political lobbying game where the politician has a policy preference. In contrast to the previous literature without politician policy preferences, more restrictive binding caps always reduce expected aggregate contributions. However the initial imposition of a cap increases contributions if the politician mildly favors the low-valuation lobbyist’s policy. The introduction of policy preferences permits analysis of monied interests’ policy influence. A more restrictive cap makes it more likely that the politician enacts the policy he would have enacted in the absence of lobbying, even in cases where expected aggregate contributions increase.     

Rewarding political supporters

Consider an elected politician who wants to identify politically savvy people who could offer him good advice. Since the incumbent won an election, people who supported him are probably better attuned to the political winds than are people who did not. The official should therefore listen to people who had supported him. For similar reasons, he may preferentially listen to groups that had given him political contributions than to groups that had not. And a politician who is initially unsure about which voters best recognize benefits promised them will favor groups that he had previously favored and that had supported him.     

Transparency and political moral hazard

This paper analyzes the effects of asymmetric information on the public control of politicians in a world where the politicians’ pre-election promises are not credible. We study a model with identical politicians and a representative voter whose interests conflict with those of the politicians’. The voter’s decision to reelect the politician depends on both observable policies of the politician and the outcome of the unobservable policies. In equilibrium, either optimal decisions for the voter are not taken by the politician or if taken, the politician would extract more rent. In the latter case, politicians are also replaced more frequently.     

An interplay between intrinsic and extrinsic motivations on voluntary contributions to a public good in a large economy

We develop a model of voluntary contributions to a public good in a large economy where peoples?? preferences consist of extrinsic and intrinsic payoffs. The model considers (i) the interplay between the two payoffs and (ii) the possibility that public provision discourages moral motivation in the intrinsic payoff (motivational shift). We show that a wide variety of crowd-out/in occurs due to public provision within a single framework, and its occurrence depends on the magnitude of motivational shift and the characteristics of the public good in relation to private goods in the extrinsic payoff.     

Corruption in a Model of Growth: Political Reputation,Competition and Shocks

The article tries to incorporate ``political corruption'' (toplevel corruption) into economic growth analysis. We propose amicroeconomic framework. An agent of the public sector, who wantsto optimize his cash flow resulting from budget misappropriations,will be highly sensitive to the instability related to his office.The natural equilibrium for the politician will be to fall into a`high political instability – low growth' trap, in whichcorruption appears endemic. However, the control of corruption bysociety will be possible. We consider a model in which alternativepoliticians compete with the incumbent politician but benefit from a common political reputation. It is shown that this situation leads to ``dynamic collective reputation'', which should restrain misappropriationpractices. This theoretical framework will be useful in defining a``sustainable'' degree of political competition and inunderstanding the asymmetric effects of extrinsic shocks on thegrowth process.     

Competition, Marketisation, Public Services and Public Ethics

The topic I address provides an embarrassment of scope. At the same time, it allows the development of a theme that is worthwhile discussing. When in the public sector is it worthwhile to import private sector concepts, principles and practices and when would the adoption of a private sector model be injurious to the state's constituents? The theme is worthwhile discussing, in part because some of Australia's jurisdictions appear to be adopting what they consider to be private sector practices, without an adequate framework to guide them. Because there is no proper framework, mistakes are made which could have been avoided. There is also some evidence that the public is uneasy about the loss of ‘public’ from the term public services. It would not be in the public’s own interests to resist, for no good reason, the adoption of private sector principles where that would allow more cost-effective services. The topic also allows a discussion on the influence on public sector ethics of the trend to place senior public servants on contracts that can be disposed of without a reason or prospect of appeal.     

THE TASMANIAN PUBLIC SERVICE AND THE FUTURE

Abstract: State governments in Australia have been regarded essentially as service deliverers, with the result that the specialist heads of public organizations, although technically competent, have rarely questioned the need for their activities. Nor does the argument that such questioning is the responsibility of the politician take account of the inertia of the existing system; an analysis of the activities which the Tasmanian government has undertaken over the past six years—including those of statutory authorities—shows a fair degree of stability. Thus we should consider building into the State's existing organizational arrangements some means of evaluating existing programs and new proposals. Such policy analysis should widen the narrow focus of the advice currently offered by public servants. Although there have been some moves in this direction in Tasmania (particularly in the Premier's Department), it has not been reflected in the structures of the public service generally. A survey of 22 government departments showed that only eight had officers concerned with evaluatory planning, and only three departments were engaged in innovative and initiatory planning. Other directions in which Tasmania's public organizations could move with benefit include an increase in lateral recruitment; breaking down the rigidity of the promotion appeals and classification systems; introducing flexible management and budgeting procedures throughout the service as a whole; and continually reviewing the structure and functions of public organizations. The questions that have been raised by recent inquiries into State and Federal government administration, namely coordination, efficiency, economy, effectiveness, decentralization and participation, have not stressed sufficiently the key issue for the public services of the 1980s, which is the nature of the relationship between the politician, the public service and the community.     

Fault Lines: The Effects of Bureaucratic Power on Electoral Accountability

This article introduces a new explanation for why citizens may fail to vote based on government performance. We argue that when politicians have limited capacity to control bureaucrats, citizens will not know whether government performance is a good signal of the incumbent's quality. We develop a selection model of elections in which policy is jointly determined by a politician and a bureaucrat. When politicians have incomplete power over policy, elections perform worse at separating good and bad types of incumbents. We test the theory's predictions using survey experiments conducted with nearly 9,000 citizens and local officials in Uganda. We find that citizens and officials allocate more responsibility to politicians when they are perceived as having more power relative to bureaucrats. The allocation of responsibility has electoral consequences: When respondents believe that bureaucrats are responsible for performance, they are less likely to expect that government performance will affect incumbent vote share.     

Tax morale and (de-)centralization: An experimental study

We consider an economy composed of two regions. Each of them provides a public good whose benefits reach beyond local boundaries. In case of decentralization, taxes collected by members of a region are spent only on that region's public good. In case of centralization, tax receipts from the two regions are pooled and used to finance both public goods according to the population size of each region. The experiment shows that centralization induces lower tax morale and less efficient outcomes. The reasons are that centralization gives rise to an interregional incentive problem and creates inequalities in income between regions.     

Deny and Attack or Concede and Correct? Image Repair and the Politically Scandalized

In the wake of recent political scandals, pundits have argued that the way a politician reacts to a scandal can make or break said politician's relationship with constituents and future in elected office. Some politicians concede guilt immediately, apologize, promise to take corrective action, and possibly open the door to moving on with their careers. Others deny culpability and attack their accusers, hoping to quickly put accusations behind them, change the subject, and channel public attention in a different direction. Does conceding guilt after a scandal breaks and offering to take corrective action to solve the problem help ameliorate the issue, or does it push the public away even further? Does denying involvement in a scandal and attacking the accuser compound the problem, or can it evoke positive feelings? This research uses an experimental design to test individuals’ reactions to how politicians act after being accused of a personal scandal (in this case, an inappropriate relationship with a staffer). Results illustrate that a strategy involving denial and attacking accusers can spur positive evaluations of who a politician is and what that politician will do in the future, while the performance of conceding and taking corrective action is mixed at best.     

The downsides of information transmission and voting

I analyze a model of information transmission in collective choice environments. An Expert possesses private information about the consequences of passing an exogenous proposal and engages in cheap talk to persuade voters to pass or reject the proposal. The Expert may successfully persuade the voters to take her preferred action even when all or most voters would receive a better ex ante payoff with no information transmission. I consider several remedies that an institutional designer may consider in order to avoid this problem while allowing information transmission that benefits the voters. I evaluate the effects of (1) limiting Expert communication to binary endorsements, (2) encouraging competition between Experts, and (3) restricting the agenda in order to consider only one dimension at a time. None of these proposals completely eliminate negative persuasion outcomes, but limiting the Expert to binary endorsements avoids the worst manipulation while preserving beneficial information transmission.     

Politics and Administration

This article develops a theory of the administration and effectiveness of government programs. In the model, a bureaucrat chooses a mechanism for assigning a good to clients with uncertain qualifications. The mechanism applies a costly means test to verify the client's eligibility. A politician exercises oversight by limiting the bureaucrat's testing resources and the number of clients to be served. The model predicts the incidence of common administrative pathologies, including inefficient and politicized distribution of resources, inflexibility, program errors, and backlogs. When the politician favors marginally qualified clients, per capita spending is low and error rates are high. When the politician favors highly qualified clients, per capita spending is higher and error rates are lower. In the latter case, the bureaucrat may also use discriminatory testing, which allows the politician to target favored clients. Such targeted programs increase budgets and reduce backlogs, but they also increase error rates.     

Governmental behavior in representative democracy: a synthesis of the theoretical literature

What is the impact of bureaucratic behaviors on tax rates? What is preferable: a bureaucrat or a partisan politician? Does a flypaper effect occur when lobby groups influence public policies? This article tries to answer these questions by analyzing and comparing six different models of public choice: (1) the median voter model, (2) the Leviathan model, (3) the slack-maximizing model, (4) a general model of bureaucracy, (5) the partisan politicians model and (6) a general model of lobbying. Among several results, it is shown that the median voter’s income and tax share almost always play a significant role in the design of the public good/tax package, even if the government does not explicitly try to maximize the median voter’s utility. The article also provides a synthesis of the positive analysis of the flypaper effect.     

Choosing a media outlet when seeking public approval

This paper considers the media outlet choice of a politician who seeks public approval for a political agenda in a broadcast interview. The available media outlets differ in their “toughness” towards the politician. An interview with a tougher media outlet is more informative, but is also more likely to yield a negative outcome. The choice of the media outlet determines the accuracy of the information that flows to the public and the volume of citizens who consume that information. The analysis shows that (1) politicians who enjoy sufficient popularity are likely to avoid tough media outlets, (2) when seeking approval for controversial agendas, politicians are more likely to appear in tougher outlets.     

Nanny Bloomberg

In his twelve-year tenure, now ex-Mayor Bloomberg came to be called Nanny Bloomberg for having introduced an unprecedented number of rules and regulations in the area of public health, to which citizens were then subjected. He operated in many different areas, as he would say, for our own good. The question is: did it ever help and at what price? And: Cui bono?     

Paradoxes of public-sector managerialism,old public management and public service bargains

This chapter considers three paradoxes or apparent contradictions in contemporary public management reform–paradoxes of globalization or internationalization, malade imaginaire (or successful failure) paradoxes, and paradoxes of half-hearted managerialism. It suggests that these three paradoxes can be explained by a comparative historical institutionalism linked to a motive-and-opportunity analysis of what makes some public service systems more susceptible to reform than others. It further argues that such explanations can be usefully linked together by exploring public service reform from the perspective of ‘public service bargains’ or PSBs (that is, explicit or implicit bargains between public servants and other actors in the society). Accordingly, it seeks to account for the three paradoxes of public management reform by looking at the effect of different PSB starting-points on reform experience, and at the way politician calculations over institutional arrangements could account for PSB shifts in some circumstances but not others.     

Coexistence of public and private job agencies: Screening with heterogeneous institutions

In response to the analysis of bureaucracies and the finding of inherent inefficiencies, public choice theory argues for an increase in competition by contracting out government services and deregulation. The paper explores the effect of coexisting public and private employment services in a model with private information of the worker about her ability and unobservable effort choice. The employer's use of an efficient unemployment exchange and an efficient private agency may lead to optimal screening with first best contracts. This is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch. In contrast to standard screening contracts, a bad type of worker earns an information rent if the employment exchange is inefficient, but the employer chooses not to use the private agency for good types.